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BRN brainchip holdings ltd

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21.5¢

2023 BrainChip Discussion, page-3464

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mapp

3,606 Posts.

311

22/08/23

20:07

Post #: 69486987

I thought that ASIC figures for the 22/12/23 were a glitch, lots of stocks had that strange spike. Gross short sale on 21 were very low.

Daily Gross Short Sales reported for 21-Aug-2023, ASX Limited (ASX) & Chi-X Australia (CHI-X)
BRN     BRAINCHIP HOLDINGS LTD            FPO                  159,524       1,775,058,145         .00
Share Price History
Date Close Change %Chg Open High Low Volume Turnover
1 21 Aug, 2023 $0.32 -0.015 -4.48% $0.33
$0.335
$0.32
4,052,902 $1,318,911
2 18 Aug, 2023 $0.335 0.00 0.00 $0.335
$0.34
$0.33
5,140,829 $1,716,320
3 17 Aug, 2023 $0.335 -0.02 -5.63% $0.355
$0.355
$0.33
8,944,163 $3,034,878
4 16 Aug, 2023 $0.355 -0.02 -5.33% $0.37
$0.375
$0.355
7,044,414 $2,543,013
5 15 Aug, 2023 $0.375 +0.01 +2.74% $0.37
$0.385
$0.365
6,543,008 $2,460,912

Compare the price graph with the short graph.

Originally posted by Lies&damnlies: ↑
Hi Mapp

I think your missing an important concept as far as LDA are concerned. (it also applies to other lenders to shorter's)

If they got shares at 59 cents being 91.5% of VWAP they would have lent the shares out almost immediately at 64c as they got a discount on the market price. Then there is the fee they charge the borrowers for the privilege of getting their shares. A 5% fee would reap another 3 cents for a total of 67 cents.
( I am unsure about the fee so 5% is my approximation that others could clarify, but I think that the fee for borrowing shares would not be cheap )

So as soon as they lend out the shares they lock in an 8 cent profit with no risk. That discount is very important.

They would be fools to hold onto them as the market has been declining strongly as evidenced by the current 32c SP. They could incur a serious loss without acting quickly. They take no risks.

At this moment if the borrowers returned the shares they have another 32c worth of value on top of the 8c profit. They could again lend them out again and charge another 5% fee. It's money for jam.

If the market for BRN booms to $1 for some reason ( a takeover or a serious groundbreaking deal) they are laughing as the shares lent out have to be returned.

They are in a win, win situation regardless of the direction of the SP. They have no risk. They immediately cover the cost of the handout to BRN by lending out shares at a higher price than those allocated to them by VWAP.

Then there is the other issue you raised about how do the shorter's close out the contract and return the shares.

BRN is currently included in the ASX200. Financial institutions hold shares for each company in the index to match the percentage of they index they contribute. At the recent re-balance BRN just scraped in to be still included in the ASX200 index. The last rebalance was June where BRN SP was in the 40's. The next re-balance in in Sept and the BRN SP is in the 30's.

If BRN is removed from the ASX200 these institutions will sell the shares as they will require the cash to buy the companies that are new additions to the ASX200.

Removal from the index normally results in the drop in shares price as there is an excess of sellers. So I see no reason for the current 7% shorter's being in the least bit worried about buying shares to return to the lender.

So watch the Sep ASX200 rebalance.

Also to be considered is that we are going again with cap in hand to LDA for another handout and they would be fools not to repeat the process, albeit at a lower SP.

Some financial institution also go through the same process with the ASX300. If the BRN SP continues to decline then they may be removed from the ASX300 as well. The shorter's will know this and almost certainly take advantage of it.

The ASX300 rebalancing occurs in March and September so by Sep 2024 the same risk of exclusion from the index could surface again if the SP continues to drop. If not the Mar or Sep 2025 still can't be ignored.

Certainly a gloomy scenario. Of coarse this outcome can be changed but it will require serious revenue linked to a contractual news.

I believe that it will happen eventually but when remains the question. Time is the enemy.

Hope this helps your understanding of what's currently happening as far as LDA and shorter's are concerned..

Just my opinions , DYOR.

cheers Lies

Expand

Originally posted by Lies&damnlies: ↑
Hi Mapp

I think your missing an important concept as far as LDA are concerned. (it also applies to other lenders to shorter's)

If they got shares at 59 cents being 91.5% of VWAP they would have lent the shares out almost immediately at 64c as they got a discount on the market price. Then there is the fee they charge the borrowers for the privilege of getting their shares. A 5% fee would reap another 3 cents for a total of 67 cents.
( I am unsure about the fee so 5% is my approximation that others could clarify, but I think that the fee for borrowing shares would not be cheap )

So as soon as they lend out the shares they lock in an 8 cent profit with no risk. That discount is very important.

They would be fools to hold onto them as the market has been declining strongly as evidenced by the current 32c SP. They could incur a serious loss without acting quickly. They take no risks.

At this moment if the borrowers returned the shares they have another 32c worth of value on top of the 8c profit. They could again lend them out again and charge another 5% fee. It's money for jam.

If the market for BRN booms to $1 for some reason ( a takeover or a serious groundbreaking deal) they are laughing as the shares lent out have to be returned.

They are in a win, win situation regardless of the direction of the SP. They have no risk. They immediately cover the cost of the handout to BRN by lending out shares at a higher price than those allocated to them by VWAP.

Then there is the other issue you raised about how do the shorter's close out the contract and return the shares.

BRN is currently included in the ASX200. Financial institutions hold shares for each company in the index to match the percentage of they index they contribute. At the recent re-balance BRN just scraped in to be still included in the ASX200 index. The last rebalance was June where BRN SP was in the 40's. The next re-balance in in Sept and the BRN SP is in the 30's.

If BRN is removed from the ASX200 these institutions will sell the shares as they will require the cash to buy the companies that are new additions to the ASX200.

Removal from the index normally results in the drop in shares price as there is an excess of sellers. So I see no reason for the current 7% shorter's being in the least bit worried about buying shares to return to the lender.

So watch the Sep ASX200 rebalance.

Also to be considered is that we are going again with cap in hand to LDA for another handout and they would be fools not to repeat the process, albeit at a lower SP.

Some financial institution also go through the same process with the ASX300. If the BRN SP continues to decline then they may be removed from the ASX300 as well. The shorter's will know this and almost certainly take advantage of it.

The ASX300 rebalancing occurs in March and September so by Sep 2024 the same risk of exclusion from the index could surface again if the SP continues to drop. If not the Mar or Sep 2025 still can't be ignored.

Certainly a gloomy scenario. Of coarse this outcome can be changed but it will require serious revenue linked to a contractual news.

I believe that it will happen eventually but when remains the question. Time is the enemy.

Hope this helps your understanding of what's currently happening as far as LDA and shorter's are concerned..

Just my opinions , DYOR.

cheers Lies

Expand

BRN Price at posting: 32.0¢ Sentiment: Buy Disclosure: Held

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(20min delay)
Last 21.5¢		Change 0.000(0.00%)		Mkt cap ! $435.4M

Open	High	Low	Value	Volume
21.5¢	22.0¢	21.0¢	$1.041M	4.863M

Buyers (Bids)

No.	Vol.	Price($)
46	5101638	21.0¢

Sellers (Offers)

Price($)	Vol.	No.
21.5¢	274006	6

View Market Depth

No.	Vol.	Price($)
45	5054019	0.210
37	1357139	0.205
92	1730717	0.200
16	620026	0.195
30	404446	0.190

Price($)	Vol.	No.
0.215	274006	6
0.220	1411787	29
0.225	932268	18
0.230	736109	19
0.235	325225	10

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